Gadgets drive online ad spend

KEY POINTS

Online advertising revenue grew by 19 per cent in the March quarter to $719 million.

Search and directories accounted for more than half the spend.

Online ad sales could top $3 billion in calendar 2012.

The proliferation of digital devices has helped boost online advertising revenue by 19 per cent to $713 million in the March quarter.

Online advertising would make up about 22 per cent of total ad revenue by year’s end, Interactive Advertising Bureau Australia chief Paul Fisher predicted.

“We’ve always said the largest single driver is consumer behaviour,” Mr Fisher said.

Advertisers were shifting more of their marketing budgets towards digital platforms as consumers took to online video, social media and “concurrent usage” (using two or more screens from TVs, PCs, smart phones and tablets), he said.

Mr Fisher said online advertising was on track to exceed $3 billion this year.

Search and directories remains the dominant category, generating $395.7 million in the March quarter, up 21.4 per cent year-on-year, and representing 55.5 per cent of total online advertising.

Directories, which consists of a minority of the category, grew at a faster rate than search.

Industry sources say Google accounts for more than 95 per cent of search revenue.

General display advertising was the second-fastest growing category, recording 18 per cent growth to $153.7 million in the quarter and representing 21.6 per cent of total online advertising.

Within the display category, video posted $11.6 million in ad revenue for the quarter, up $0.6 million from the December quarter.

However, email-based advertising dropped by $2.6 million to $7 million over the same period.

Motor vehicles continued to be the highest-spending industry sector, generating 20.4 per cent of total online display ad revenue. This was up from 17.4 per cent in the December quarter.

Finance was the second-highest sector, posting 13.3 per cent of total online display, up from 12.9 per cent in the December quarter.

Real estate rose from a 7.9 per cent to an 8.4 per cent share, while fast moving consumer goods rose from a 6.8 per cent share to 8 per cent.

Computers and communications was edged out of the top five industry categories, generating 7.2 per cent of general display revenue in the March quarter, down from 9.7 per cent in the previous quarter.

“The retail and government sector online spend continues to flatline, which is surprising given both are facing tough marketing and communications conditions,” Mr Fisher said. “There is a real opportunity for these sectors to invest their advertising budgets online.”

Online classified advertising was the slowest growing of the three main categories, posting revenue growth of 13 per cent for the March quarter year-on-year. Classifieds generated $163.5 million, representing 22.9 per cent of total online ad revenue.

CPM-based pricing (cost per thousand) remained the dominant expenditure type, representing 74 per cent of the total online ad spend, compared to 26 per cent for direct response.

Online advertising seems to be maintaining its growth trajectory. The 19 per cent growth for the 2012 March quarter compares to 17 per cent growth for the first quarters in each of 2011 and 2010.

IAB Australia announced it would release online video measurement data later this year.